IRS Provides New Model Rollover Notices

The IRS has issued Notice 2020-62, which modifies the two safe harbor explanations in Notice 2018-74 that may be used to satisfy the requirement under Section 402(f) of the Internal Revenue Code (IRC) that certain information be provided to recipients of eligible rollover distributions.

The updates are to reflect legislative changes in the Setting Every Community Up for Retirement Enhancement (SECURE) Act. The SECURE Act implemented a new exception to the 10% early distribution penalty on retirement plan distributions for qualified birth or adoption distributions. It also increased the age for required minimum distributions (RMDs) to  72 for employees born after June 30, 1949, from age 70.5.

The new notice includes an appendix with two model safe harbor explanations: one for distributions that are not from a designated Roth account and the other for distributions from a designated Roth account.

The notice also clarifies that “although a coronavirus-related distribution [CRD] generally may be recontributed to an applicable eligible retirement plan, a plan administrator is not required to provide a Section 402(f) notice to a recipient of a coronavirus-related distribution.” CRDs were created as part of the Coronavirus Aid, Relief and Economic Security (CARES) Act.